Two Internet telephony partners have parted ways and are set to become competitors in the emerging market. At last week's Internet Commerce Expo, MagicTel joined AT&T and Interline - a consortium of network operators who collectively own a global network of data lines - to launch its Internet phone services to business users. On the other side of the exhibition hall, Linkage Online joined Network Telephony to demonstrate the latter's PC-to-phone voice communication technology, although Linkage Online officials said the two companies were not official partners. Linkage Online and MagicTel worked together last year to demonstrate an Internet phone service which let Hong Kong users call North America, Australia, New Zealand and Britain. It attracted industry attention, since it appeared a low-cost alternative to standard IDD calls, as usage charges started from $1 per minute. That service, according to Linkage Online, was never launched officially. According to MagicTel chief executive Ryan Hendricks, the companies quit their relationship in March. The two said the split was a commercial decision and a result of differences on business development. For end-users, the new services from MagicTel and Network Telephony appear similar, as both allow international calls cheaper than traditional IDD or even call-back services, but there are differences between the technologies. Network Telephony's system can support both PC-to-phone and phone-to-phone calls for business and home users. Due to Hongkong Telecom's monopoly on long-distance services, only intra-company Internet telephony phone calls - over a corporate-private or virtual-private network - are legal until next year. MagicTel is a pure voice-over-IP (Internet Protocol) service. It relies on an AT&T private-leased circuit between Hong Kong and the US, and Interline's global IP network, to allow SAR corporate users to make international phone calls to at least 28 countries. Charges start from $1.5 per minute to the US and Canada up to $8 per minute to Russia and Brazil. MagicTel is one of 14 affiliates of Interline, which forms a global IP network by linking via public lines, the private IP network of partners such as Mitsubishi in Japan, Hyundai in Korea, OzEmail in Australia, Concentric in the US, Norweb in Britain and Happiso in the mainland. 'We are getting closer together,' said Mr Hendricks. 'This means the amount of telephony traffic that needs to be sent over public lines is decreasing. Service quality will improve, as voice calls will be less vulnerable to the uncontrolled Internet traffic.' Network Telephony's service integrates IP and frame-relay technologies. A voice message is compressed and converted into an IP data packet, which is delivered over a private frame-relay network. Network Telephony is a partner of Infonet, and has access to its frame-relay backbone covering 42 countries. Frame-relay packets had smaller 'headers', which store addressing information, than IP packets, meaning voice-over-frame-relay required less bandwidth than voice-over-IP, said Raymond Cheung, sales director of network systems integrator, Unitech. 'For example, a compressed 8K voice packet may take 9K of bandwidth for voice-over-frame-relay, but 10.2K or 10.4K in the case of voice-over-IP,' he said. Voice-over-frame-relay, with QoS (quality of service), also offered a guaranteed bandwidth, while Internet was a public, uncontrolled environment, and building a private IP network was not always cost-justified, added Mr Cheung. However, voice-over-IP, or Internet, had a broader coverage, said Chin Man, president of Linkage Online. Network Telephony's global sales director Michael Pavick said Linkage Online was the only Hong Kong ISP it had talked to. It planned to join one or two ISPs to resell the service. Mr Pavick said Linkage Online could offer Network Telephony a sophisticated backbone in the region, although his company already had network coverage in Hong Kong, the Philippines, Malaysia, Singapore, Australia, New Zealand and Japan.